Kumiko Shimotsubo can pinpoint almost to the day the start of “the ice age”. For her, the great opportunity-freeze began in the winter of 1995. That was when she and her fellow students at the University of Tsukuba, a modern campus outside Tokyo, set out on a rite of passage known as the shushoku katsudo. Literally the “find work activity”, the shushoku katsudo is the mass screening of graduates by corporate Japan. It is a crucial event for those wanting a slice of the Japanese Dream. Graduates who fail to slide directly from university into a large corporation rarely get a second chance. The “find work activity” amounts to a once-in-a-lifetime shot at what Shimotsubo calls “the promised road”.

For Shimotsubo, a slightly disenchanted 37-year-old whose business card identifies her as a “Bilingual Writer/HR Consultant/Intercultural Facilitator”, the promised road has been barred to entry. She failed to land a job at an established company on graduation, obliging her to strike out on her own. Once off the Japanese corporate escalator, you can almost never get back on. The same disappointment has awaited millions of Japanese who, like Shimotsubo, set out in adult life after Japan’s economy juddered to a near-halt in the 1990s.

David Pilling

There are still excellent jobs to be had at elite companies. Japan’s economy has not performed as wretchedly as is sometimes believed, especially when measured in per capita terms. The unemployment rate, now 4.6 per cent, has never scaled the dreadful heights of the US or Britain, let alone Spain. But what used to be considered good jobs at stable companies are far scarcer than they once were. In the years of super-accelerated growth, before Japan’s bubble burst, male students at good universities were almost guaranteed a position at a paternalistic company. Under normal circumstances, it would last until retirement. A nice wife, perhaps one of the secretaries from the typing pool, would follow. Sure, men might have to sing company songs and put in hours of pointless overtime, but they would be looked after. Life was mapped out.

Today, those certainties are vanishing. For many they have disappeared altogether. An increasing number of younger Japanese work in part-time, dead-end jobs; a minority simply stays at home playing video games or surfing the internet. Japanese companies, which have adapted to tightened economic circumstances more quickly than policy makers, have dramatically cut the number of full-time workers they employ. Many have achieved that not by sacking existing workers. In the main, they have tried hard to honour the implicit contract with employees that Shimotsubo likens to the compact between a feudal lord and his samurai. Instead of ejecting their loyal retainers, companies have saved money by simply not hiring new ones.

In 1990, less than 20 per cent of workers were classified as casual. Today more than 35 per cent are part-time, non-permanent, contract and so-called “dispatched” workers – sent, like returnable packages, from employment agencies to companies wary of taking on permanent staff. That phenomenon is a commonplace of advanced economies. But it has wounded Japan’s (not entirely accurate) self-image of being a singularly egalitarian society. The casualisation of labour has widened the wealth gap. Many part-time workers earn as little as $10 an hour – even less outside Tokyo – and receive little in the way of health and pension benefits. To many Japanese, society feels more uneven, more unfair than at any time in living memory.

I met Shimotsubo, now married with a daughter, in an elegant tearoom in the lobby of Tokyo’s Imperial Hotel. Slim, with a fashionably jagged haircut and a double string of pearls hung over a loose sweater, Shimotsubo speaks good English, learnt at an internationally minded high school in Yokohama. That has helped her short-circuit the Japanese system by getting work at foreign companies operating in Japan.

Although her career sounds successful – she was HR director at one foreign company, something a woman working for a Japanese firm could never aspire to at such an early age – she talks with bitterness about her banishment from the Japanese Dream. “I think it’s a kind of social discrimination,” she says. “Once you drop off the promised road, you’re evaluated as ‘not a good person’.” Through no fault other than being born too late, she and millions of others have been excluded, accorded a “lower social status” and no second chance. “I was just a senior high-school student when Japan was really booming,” she says wistfully. “So, personally, I am really jealous of that generation. They had their very happy hour. But the people of the ice age, like me, don’t know what the bubble was. Today’s younger generation don’t know what growth is. Their experience is just downsizing and recession ... That’s why dreams are shrinking in Japan.”

Shimotsubo’s is a common explanation for what has happened to the post-bubble generation. Most stories, however, can be read more than one way, and Japan’s is no exception. One person with a more optimistic take is Noritoshi Furuichi. A 27-year-old PhD student at Tokyo University, last October he published Happy Youth in a Desperate Country, a book arguing that, in some ways, the prospects of Japanese youth have not shrunk, but have expanded and brightened.

Furuichi dresses fairly typically for a twenty-something Japanese man, which is to say he looks nothing like a drab-suited salaryman. He’s more like one of the stylish, androgynous creations of a manga comic, such as the dashing young wizard in Howl’s Moving Castle. His well-groomed hair has a delicate henna tinge and he wears casual, neatly pressed, off-the-peg clothes. He carries an iPhone 4S and, over his shoulder, a capacious purple shoulder bag.

Furuichi says that, far from being miserable, young Japanese have never been happier. “The media has been unrelenting in their depiction of youth as poor, desperate, in dire straits and hapless.” In fact, he says, data show younger people are more contented than ever before. Of respondents in a recent government survey aged 20-29, nearly three-quarters expressed themselves satisfied, the highest level of youth “happiness” since the survey began in the 1950s. Back then, youth satisfaction was at 50 per cent. It has risen steadily over the decades to 73 per cent, with young women marginally happier than young men. That is a startling statistic given what is commonly written about the optimistic years of economic take-off and the supposedly sad, directionless youth of today.

Noritoshi Furuichi, 27, PHD student: ‘Not many 20-year-olds would want to return to that system’

I met Furuichi in a café at the top of a glass tower overlooking Shinagawa station, one of Tokyo’s busiest. The tower itself was built in 2003, part of a massive complex, one of several ambitious projects that have transformed the skyline in the two decades since the economy supposedly slipped into a coma. Just as Tokyo’s physical surroundings are constantly shifting, so, says Furuichi, younger generations are adapting to their new environment, even thriving.

He puts the high happiness quotient down to the fact that younger people have no need to endure the delayed gratification of previous generations. When the economy was booming and the cult of gross domestic product was rampant, he says, people were continually chasing a better life – but rarely living it. In the 1960s, when the economy was growing at rates comparable to today’s China, half the population was rural. Those in the cities were often alone, sending their pay cheques back home to relatives. “They were working on behalf of someone else. They were serving the future, serving the provinces, serving something other than themselves,” he says. Today, jobs may be less secure, but people are living in the moment. “Now they’re working for themselves, making their own decisions, taking their own responsibilities and reaping their own results. That’s a major shift.”

Many older Japanese sympathise with youngsters’ lack of job opportunities. Some also complain about what they see as youth’s loss of “fighting spirit” and apparent contentedness to live off the wealth built up by their hard-working parents. Furuichi says it’s true that many Japanese in their twenties and thirties have less drive. Some cut down on expenses by sharing an apartment with friends, a relatively new phenomenon. Absolved of responsibility to get one of the dwindling number of prestige jobs, many simply strive to be happy in the present. They set up their own businesses, volunteer, take up a hobby or adopt alternative lifestyles. So-called “slow living”, a sort of modern version of the hippie lifestyle, has become fashionable, with its emphasis on the environment, localism and “gross national happiness” over the “empty affluence” associated with the previous rush to GDP. Some like to travel or eat out in Japan’s high-quality restaurants. “More young people are staying in the provinces, fewer are buying cars. In exchange they’re spending money on food, clothes, phones and spending time with their friends.”

We knew our fathers were being called ‘economic animals’ and made fun of … Our mothers were essentially maids

- Noritoshi Furuichi

Youngsters, especially the so-called “parasite singles” who live rent-free with their parents, are in no rush to get married or to have children. Although it has risen slightly in recent years, Japan’s fertility rate has fallen to 1.4, well below 2, which is the rate needed to maintain a population. That is higher than South Korea’s 1.23 or Singapore’s 0.78, though – unlike Japan – Singapore supplements its dwindling native population with a steady inflow of immigrants. The UK, at 1.91, is close to being able to maintain its population without immigration, while the US, at 2.06, could just about do so unaided. For Japan pessimists, the low birth rate does not stem from the inevitable decline of fertility rates in affluent, urban societies, but is a sign that Japanese youth is feeling too poor and too pessimistic to reproduce.

Furuichi disagrees. Many youngsters are taking conscious and rational decisions about how to maximise their enjoyment, he says. Very few would trade their current lifestyle for that of their parents. “I don’t think there are many 20-year-olds who want to return to that system. We knew our fathers were being called ‘economic animals’, that they were made fun of for being hapless cogs in the machine,” he says. “Our mothers did what they could to be happy housewives, but they were essentially maids.” Younger Japanese of both sexes have broadened their outlook.

Yoshi Ishikawa, 28, works at ETIC, supporting entrepreneurs:
‘We are more interested in quality of life’

Yoshi Ishikawa certainly has different priorities from his parents. Although he managed to secure a high-flying job at a foreign company, he gave it up a couple of years ago to pursue something more satisfying. After an undergraduate degree in electrical engineering and post-graduate studies at Nagoya University, he landed a job at Accenture as a management consultant. He worked in Texas, Barcelona and Tokyo, but felt unfulfilled. What was the point, he thought, of advising one Japanese beer company how to grab market share from another? That was the sort of thing that might have motivated his parents’ generation, but surely there was more to life than that?

Ishikawa, now 28, was brought up in Kira, a town of rice paddies and scattered auto-parts factories about an hour from the industrial city of Nagoya, where Toyota has its headquarters. His father worked at a trading company that employed about 30 people. His mother is a housewife. His family wasn’t particularly well-off. Of three sons, he alone went on to higher studies. One of his best friends from home never really got a job, but has become what the Japanese call a hikikomori – a “shut-in person” rarely venturing out. “It’s not a psychological problem. He’s just a bit scared, or he doesn’t feel the need to work because he can live with his parents,” Ishikawa says. Nor is it an economic phenomenon. “Hikikomori come from both rich and poor families. And if you are really poor, you cannot afford to lie around in bed all day.”

Some members of his generation may suffer from a certain ennui, but the clear goals of an earlier era don’t look so appealing either. “Our fathers’ generation didn’t look so happy to us. They worked such long hours. They earned money, but families in those days led separated lives. Maybe we are asking ourselves, ‘What are we working for?’ That’s something we are trying to figure out.”

Ishikawa’s personal answer to that question was to join an organisation called ETIC, the Enterprise Turnaround Initiative Corporation. A government-supported body, ETIC helps struggling businesses stay on their feet and teaches would-be entrepreneurs how to make it. “I’m pretty sure Japan needs more entrepreneurs who can help us innovate. I’m fairly sure I don’t want to work for a large company.”

His new place of work is an open-plan office in Shibuya, a Mecca for Tokyo’s fashionable youth. His office has an airy feel, with the staff sat at long, rough-hewn benches made by one of the small businesses ETIC supports. Most of Ishikawa’s colleagues are in their twenties or thirties. They are casually dressed. They work on laptops. The office smells of freshly brewed coffee. There is at least a hint of the California start-up.

Since last March, Ishikawa has spent some of his time in north-east Japan among the fishing communities whose boats – and even whole families – were swept away by the tsunami. In Kesennuma, large sections of which were destroyed, ETIC has sent entrepreneurs to teach fishermen how to raise their profit through branding and selling directly to consumers rather than through wholesalers. “What we regard as a new frontier is to do something good for society or for our community, not just selling more beer,” Ishikawa says with youthful piety. “Even if we earn less money, so long as we can work with satisfaction that is OK. I think that’s how young people think these days.”

Ishikawa sees a sharp divide between the attitudes of pre- and post-bubble Japan. His father’s generation had huge loyalty to their companies, more even than to their families, he says. “We are more interested in quality of life.” He thinks it’s wrong to say the younger generation has lost the drive that made Japan so successful. For him, younger Japanese are simply working out new priorities and a new, smarter, idea of work-life balance. “They think of us as the anything-goes generation with our iPhones and our video games and not much else,” he says. “But there are so many young people trying to make something new.”

Noriaki Imai, 26, social entrepreneur: ‘Living has become too hard … the sense of community has weakened’

One of the young social entrepreneurs Ishikawa’s organisation supports is 26-year-old Noriaki Imai, who runs a non-profit organisation helping disadvantaged children in Japan’s second city of Osaka. Imai has an unusual story. At 18, he went alone to study the effects of depleted uranium shells on civilian populations in Iraq. It wasn’t the best thought-out of plans. Within hours of his arrival, he was kidnapped by Iraqi militiamen. In a statement accompanied by footage broadcast on Japanese television, gunmen threatened to burn Imai alive, along with two other Japanese hostages, unless Japan withdrew ground troops from the country. There was an agonising nine-day wait, but eventually the three were released. They returned to Japan not to the hero’s welcome one might have expected, but to an intensely hostile reception in which they were blamed for compromising the Japanese government. The first time I saw Imai in person was shortly after his return in 2004. His head was bowed in shame.

Imai’s foray to Iraq, ill-conceived though it might have been, struck me as somehow symbolic of a generation straining to find meaning. Gone were the easy certainties of catch-up Japan. Young people now had to discover life themselves, even if that meant travelling to a hostile foreign country. I saw Imai again this spring in Osaka. We met in a restaurant. Jazz played over the speakers and through the wooden walls came the sound of youthful chatter lubricated by alcohol. Imai told me that, after his return from Iraq, he was depressed for several years. He studied at the international university in Oita, south-west Japan, but kept mainly to himself. “I became psychologically sick,” he says. For a few years he received hate-mail complaining that he had wasted taxpayers’ money. “This is a stressed-out society,” he shrugs. “Many people just wanted to let off steam.”

By his fourth year of university he felt better. He travelled to Zambia with a friend who was helping to build a school and was struck by the optimism. “Compared to Japan I felt they had so much hope for their country,” he says. “A fifth of the population is infected with HIV and the average life expectancy is just 46. But I sensed hope in their eyes. I came back to Japan and got on the train and everyone looked so gloomy.”

Imai felt he needed to “do something” for Japanese kids. Like Ishikawa, he arrived via a detour, in his case selling pork and beef for a small trading company. “Buy cheap, sell expensive,” he smirks. He quit a few months ago to devote himself full-time to mentoring troubled children. At one underprivileged high school he met a boy who had lived with three different fathers and whose mother had a multiple-personality disorder. The family was on income support and the boy sometimes worked at night to earn extra money. Imai says he has been surprised at the level of social deprivation. “These kids don’t have any self-confidence. They don’t feel as though they have a future.”

I tell him about Furuichi’s theory, that what youngsters have lost in income security they have gained in freedom. Imai is not convinced. “Living has become too hard. Younger people only have part-time jobs or contract jobs. The sense of community has become weaker.” He fears for Japan’s economy, worrying that the public debt of 230 per cent of GDP will one day explode. “I don’t know when this bankruptcy will happen. Maybe we’ll be OK for three years or five years. But 10 years?”

I don’t know what they should call my generation. Maybe the tough generation, certainly not the happy generation

- Noriaki Imai

Some social critics say such preoccupations are taking their toll. When the bubble burst in the early 1990s, the suicide rate shot up, jumping 35 per cent to 32,863 in 1998 alone, a year of big layoffs. It has remained above 30,000 ever since, about 90 a day, though it has fallen marginally in recent years. That puts Japan below Russia in the suicide league tables, but well above many advanced countries such as Britain and France. Although the overall number of suicides fell again last year, youth suicides rose. The number of students killing themselves was more than 1,000 for the first time since 1978. Some 3,300 people in their twenties also ended their life last year, an increase of 2 per cent on the previous year. “I don’t know what they should call my generation,” says Imai. “Maybe the tough generation, certainly not the happy generation.”

. . .

Yuri Takeuchi studied law at Tokyo University, the course favoured by the top echelon of Japan’s elite bureaucracy. Instead of going on to the foreign service or to law school as might have been expected, she entered business. She chose to apply for the hardest company possible, Mitsubishi Corporation, the very definition of Shimotsubo’s “promised road”. Last year, Mitsubishi took 165 graduates on to its fast-track programme, just 31 of them women. Takeuchi was one of them.

In many ways Takeuchi, who turned 25 last month, does not fit the mould of an elite Japanese student. The daughter of a trading company executive, she has spent half her life in the US where she attended both elementary and high school. She speaks impeccable, colloquial English. She spent four years studying law at Tokyo University, universally known as “Todai”. “I hated law. I hated Todai,” she says decisively. She found the law school inward looking and few of its professors much interested in life outside Japan.

Takeuchi’s international exposure had given her a different perspective. As a teenager, she had been profoundly moved by a newspaper article about a young Chinese student who committed suicide because his family could not afford modest tuition fees. She began to raise money for China and other causes. She travelled to Bihar, India’s poorest state, with Unicef. Back in Japan, she didn’t exactly fit the mould. She continues to look at her own country with the eyes of a social anthropologist.

A few things have struck her about corporate Japan. One is the still-evolving views about what is expected of women. When she joined Mitsubishi, the head of HR warned her that it would be hard for her to find a husband; few men would want to marry such a high-flier. “I said, ‘I didn’t choose my job to get married,’” she sniffs, clearly put out. In her mother’s day, she says, the expectation was that you’d meet a man at work, get married and leave your job to settle down. “In those days, the boss would come up to you and say, ‘Congratulations on your engagement. When are you going to quit?’” Attitudes are shifting, albeit slowly. “In recent years, the word ‘compliance’ has come in. It’s a very vague word. But I think that word itself has changed things a lot. People are very afraid of that word and careful about what they say and do.”

Compliance doesn’t solve everything. Her male colleagues regularly go out drinking at hostess bars. That’s where much of the office bonding and trading of information takes place. Women’s views are not always taken seriously, though it can sometimes work in reverse. Takeuchi is often invited to important dinners with clients because she is hana – a flower to brighten the grey-suited occasion. Some of her female colleagues live up to their reputation of deliberately dumbing down in the pursuit of a traditionalist husband, she says. “I would never become a housewife. That’s just not my personality.” Even if she eventually quit work to have a family, she would volunteer or work for a non-profit. “I just can’t do that traditional housewife thing.”

At least she feels she has a choice. Does that mean, as Furuichi argues, that young Japanese now have more options? After thinking for some time, she says maybe people are happier because they don’t feel the need to be so competitive. “In my father’s day, everything was about competing with the US and trying to become a better country. It wasn’t good enough for them. Now it’s come to a point where people are happy with the status quo – even if it’s not that good.”

Japanese youth, she feels, lacks the sense of urgency she has seen in other countries. They are too comfortable in their affluent, peaceful society. “If you go to China, or Korea or India and you talk to young people, you realise they are in a much more difficult situation. But they are so hungry. Everyone is under constant competition and constant pressure.” If Japanese youth is too complacent, she implies, their more ambitious brethren from other countries will quickly overtake them.

Furuichi says something similar. The “happy generation” may be kidding itself, he says, enjoying its affluence while Japan heads for crisis. That would make youngsters more like passengers on the Ship of Fools than confident navigators of their own destiny. “This is not a sustainable course. Thirty years from now, all these people living with their parents will need to care for those parents. Are they prepared for that, financially or emotionally?”

Japan, he reckons, can probably maintain its present course for several decades, living off the country’s mountainous savings and protected by its relative isolation. “Compared to what’s going on in the outside world, Japan still feels pretty good,” he says, contrasting it with what he perceives as the economic crises and social dislocations raging in Europe and the US. “It’s not obvious to anyone that we’ve gone off the rails. If the old system had completely fallen apart, we might have renewed it,” he says, half regretfully. “It’s an open question as to whether this is a form of warped happiness. But the fact is, if Japanese youth are in dire straits, they’re not aware of it.”

David Pilling is the FT’s Asia editor. His book on Japan will be published by Penguin next year

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